#TradingTools101 RSI (Relative Strength Index) is an oscillator that measures the speed and change of price movements. It ranges from 0 to 100, where values above 70 usually indicate overbought conditions, and below 30, oversold conditions. It is useful for detecting possible trend changes or confirming strength in one direction.
The MACD (Moving Average Convergence Divergence) compares two exponential moving averages (typically 12 and 26 periods) and generates signals through crossovers with its signal line (a 9-period average of the MACD). This indicator is widely used to identify momentum and possible entries or exits in the market.
Moving averages smooth price movements and help visualize the overall trend. The simple moving average (SMA) and the exponential moving average (EMA) are the most common. Crossovers between a fast average and a slower one (for example, EMA 50 vs EMA 200) can signal trend changes.
Together, these indicators provide a more comprehensive view of the market: strength, direction, and momentum. However, they should be used with other factors and not in isolation to make more accurate trading decisions.